We study the decentralized implementation of efficient outcomes through multilateral bargaining in the river sharing problem. We consider a class of mechanisms where agents first announce consumption levels and then bargain over monetary compensation. We first determine which mechanisms give incentives to always allocate the water efficiently. Among these, we take an axiomatic approach to single out three mechanisms that guarantee a fair division of the welfare gain.
We study the decentralized implementation of efficient outcomes through multilateral bargaining in the river sharing problem. We consider a class of mechanisms where agents first announce consumption levels and then bargain over monetary compensation. We first determine which mechanisms give incentives to always allocate the water efficiently. Among these, we take an axiomatic approach to single out three mechanisms that guarantee a fair division of the welfare gain.